The Covid-19 battering of Nairobi bourse-listed firm’s share prices has presented an attractive opportunity for investors with a long-term view to accumulate stocks and hope for a sustained recovery as companies start turning the corner on the pandemic.
Analysts are now projecting continued interest in most of the stocks especially in telecommunication and banking sectors with foreign investors already making a comeback.
The green shoots started showing last December as equities embarked on an upward trajectory.
The NSE-20–which tracks the 20 best performing counters– gained 6.2 percent in that month from November while all share index points also rose by 4.8 percent.
Large cap counters such as Safaricom hit a 52-week high of 34.25 on the Central Bank of Kenya announcing lapse of free M-Pesa transactions for Sh1,000 and below which had denied the telco billions of shillings.
Bamburi cement also gained 5.4 percent month-on-month to close at Sh37.85 as NCBA and DTB rose by 18.9 percent and 21.5 percent respectively in the same period.
The strong ending has spilled over to the New Year with more than half (31) of the Nairobi Securities Exchange (NSE) closing last week with price gains, signalling a renewed interest in equities after a tumultuous 2020.
Safaricom in particular touched a new-all-time high of Sh36.50, sending excitement to the market, especially with foreign investors turning net buyers.
Foreign investors
The total value of investor wealth at the NSE is now at 11-month high with foreign investors showing increased interest in key counters.
"We anticipate the return of foreign investors to the bourse who in 2020 withdrew over Sh29 billion from the NSE on pandemic jitters," says AIB-AXYS Africa in its outlook for the year.A recent upgrade on the Morgan Stanley Capital International (MSCI) emerging markets index, gave Kenya increased allocation with the weight in the index rising to 9.49 percent from 8.2 percent after the exit of Kuwait."That increased weighting promises to result in more capital allocation to the Kenyan market by foreigners," says NSE chief executive Geoffrey Odundo.For banking stocks, high provisions for non-performing loans and sharp rise in requests for loan restructuring that were witnessed last year battered their prices.However, ICEA-Lion Asset Management chief executive Einstein Kihanda says a strong recovery is expected hinged on slowed provisions and increased loan repayments."We see a huge upside potential for banking stocks. We expect that as the economy continues to recover in areas such as the hospitality industry, education and manufacturing, businesses […]
